I love subway trains. Perhaps it’s the thrill of rapidly traveling in darkness under congested city streets. My father took me for my first subway ride in Chicago when I was a young boy. Chicagoans affectionately call the subway the “L’, an abbreviation for the word “Elevated”. Unlike most cities, elevated tracks still stand in Chicago’s Central Business District and demarcate the “Loop” (comprising the city blocks encircled by those tracks). Later, I encountered new names for my favorite form of urban transportation. While New York (and most US cities) have the common subway, Boston has the “T”, London the “Underground” or “Tube”, Paris the “Métro,” and Berlin the “U-bahn” and “S-bahn.” I never waiver in my desire to ride the subway in a city I visit for the first time. Budapest, Buenos Aires, Milan, Rome, Montreal, Toronto to name just a few. Last year I bought a book that contains nothing but subway maps from cities around the world. I’m such a subway geek!
I have frequently traveled via the London tube between Heathrow Airport and Paddington Station. For several years I read for my PhD in Management — or “studied for my PhD” in American parlance — in the UK. Arriving at Heathrow, I would enter the Tube station where I would hear the public service announcement cautioning me to “Mind the gap!” I must confess I had no idea what the announcement meant the first few times I heard it. Surprising since I had years earlier caught the subway home from the Financial District in Lower Manhattan where I then worked. South Ferry Station had no similar announcement, but it did have metal grills / grates that, upon the train’s arrival, extended from the station’s curving platform to meet the train’s doors. Maybe distracted and oblivious New Yorkers like myself needed a mechanical solution to prevent them from falling into “the gap”!
What causes “the gap”? Is the train’s floor higher or lower than the station? Is a void created between the train carriage’s linear side and the curved platform edge? Is it the result of uncoordinated changes in platform and carriage design over time? Whatever the reason, “the gap” may lead to a misstep by the subway rider, causing grievous injury to the passenger and degraded performance for the overall system due to interruptions in service.
Perhaps I was subconsciously influenced by the message to “Mind the gap!” Perhaps it was the misunderstanding / confusion I sometimes experienced as a Yank trying to speak English with the British? (“Two nations separated by a common language” as George Bernard Shaw is quoted as saying.) Perhaps it was three years of reading management literature on the definition of value and discovering there was no commonly accepted definition across academic disciplines and / or business functions? Perhaps it was the increasingly specialized terminology I encountered within the business world and in academe while simultaneously reading / hearing of the need to be cross-functional / multidisciplinary in business? I had encountered what appeared to be a “value gap” in management theory and practice – I had found my research topic! I synthesized linguistic concepts, theoretical definitions of value and empirical models to create a new multidisciplinary framework, the Integrated Value Process (IVP), describing how value is conceptualized, configured, and implemented across company value chains.
The IVP framework identifies five different “value gaps” that may occur within firms and across their respective value chains. Like the Tube passenger who missteps, falls, possibly gets hurt, and impacts system performance due to “the gap,” so customers might encounter “value gaps” when interacting with companies (and indirectly their respective value chains). When I tested the framework across six UK and US value chains — firm triads each consisting of a customer company (“the buyer”), the focal company (the company I researched), and its supplier – I discovered multiple instances of such value gaps … even within firms whose executives considered their respective organizations to be value-based or value-driven! To varying degrees, misinterpretation / mistranslation / misalignment of value occurred in all value chains I researched.
Is this surprising? In an age of global value chains with increasingly specialized functions (often based on varied academic disciplines) and greater outsourcing / subcontracting, perhaps not. Many value chains consist of companies whose workers are from multiple countries / cultures speaking different languages. The Anglo-American differences I experienced pale in comparison. Disciplinary / functional definitions of value also differ within the same company. Marketing (customer value), Accounting (financial value), Finance (shareholder value), Purchasing (supplier value), and Quality (production/operations value) each have alternative definitions of value. There are alternative definitions of value encountered even within a single function / discipline — Finance / Accounting / Economics each have multiple views of what should be included in “cost”!
The IVP framework is a useful tool to identify potential value gaps. More importantly, IVP can be used to measure actual value gaps and target improvement efforts to minimize those gaps thereby improving the flow of value to customers. This will enable true Integrated Value Management.
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Andrew Swan, PhD is a multidisciplinary and cross-functional integrator of strategy, processes, and information technology. His focus and expertise center on helping executives increase value creation and optimize value flows in business. Dr. Swan holds four degrees in Management, Accounting & Finance, Information & Knowledge Strategy, and Computer Science from the University of Chicago Booth School of Business, the University of Bath School of Management, and Columbia University.
He frequently publishes articles on value chains, value streams / flows, and Integrative Value Management on his website www.andrewjswan.com. Dr. Swan created the Integrated Value Process (IVP) Framework to help companies optimize the flow of goods & services, funds, and information across their respective value chains for multiple stakeholders. He can be reached at email@example.com or at +1.773.633.7186. He lives in Chicago.